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Christine Aebischer is an former assistant assigning editor on the small-business team at NerdWallet who has covered business and personal finance for nearly a decade. Previously, she was an editor at Fundera, where she developed service-driven content on topics such as business lending, software and insurance. She has also held editing roles at LearnVest, a personal finance startup, and its parent company, Northwestern Mutual. She is based in Santa Monica, California.
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Table of Contents
MORE LIKE THIS Small BusinessTable of Contents
MORE LIKE THIS Small BusinessA merchant account is a bank account that makes it possible for businesses to accept credit and debit card payments from customers. The account holds funds from customers’ card payments and then deposits them into the business’s bank account, so that they can be withdrawn. Many point-of-sale (POS) systems and payment processing companies provide merchant accounts in addition to other merchant services .
Featured card placement may be affected by compensation agreements with our partners, but these partnerships in no way affect our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
NerdWallet Rating Starting Atin-person; 2.9% + 30¢ online.
Read Review Learn moreAfter a customer pays with a credit or debit card, either in person or online, a payment processor clears card transactions with card networks and issuers. The funds then go into the business’s merchant account before moving to its bank account. Generally, funds are accessible one to two business days after the transactions are processed.
The largest ongoing expenses associated with a merchant account are generally the credit card processing fees charged by the payment processor. Sometimes the merchant account provider and the processor are the same company; sometimes they're different.
Other fees can include:
Setup fee: A one-time fee paid upfront to set up a merchant account.Monthly minimum fee: A minimum dollar amount you’re required to pay each month in processing fees. For example, if the monthly minimum fee is $20, and you only owe $15 in processing fees for that month, you will be charged an additional $5 to meet the required minimum.
Monthly or annual fee: An ongoing fee paid each month or year for the services provided by your merchant account provider.
Early termination fee: A fee for breaking the terms of an agreement or ending a long-term contract early. This fee is often determined by the length of time remaining on your contract and/or your monthly processing volume amount.
Statement fee: An administrative fee for mailing statements.Batch fee: A flat fee paid when all of your transactions for the day are batched together and sent to the merchant account or payment processor.
Chargeback fee: A fee the merchant pays when a customer disputes a charge on their credit card, known as a chargeback .
Advertisement NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Payment processing fees
plus interchange, in-person; 0.50% + 25¢ plus interchange, online.
Payment processing fees
in-person; 2.9% + 30¢ online.
Payment processing fees
in-person; 2.9% + 30¢ online.
Starts at $0/month for unlimited devices and locations.
The short answer is yes — your business needs some sort of merchant account to accept electronic payments, like credit cards, debit cards and digital wallets. Many payment processors allow you to set up a dedicated merchant account, meaning the account is specifically underwritten for your business. These dedicated merchant accounts involve a thorough approval process and typically can’t be set up immediately.
However, a dedicated merchant account isn’t your only option. You could also use a payment service provider , which allows you to accept card payments using an aggregated merchant account. Since this option pools multiple businesses’ funds into the same account, it’s usually easier to apply for and can be set up almost immediately. However, these types of accounts often experience more freezes than dedicated merchant accounts.
Because a dedicated merchant account requires an extensive application process, the provider will be more familiar with your business. Often, that makes it easier to negotiate rates or get assistance.
You have high sales volumes or process a high number of transactions.Many merchant account providers offer discounted transaction fees based on sales volume and number of transactions.
Your industry is considered high-risk.In industries with a greater risk of fraud and chargebacks, such as telemarketing or infomercial sales, having a dedicated merchant account may be the only option available; many payment service providers don't offer high-risk merchant accounts .
Because a payment service provider combines several businesses into one large merchant account, the risk is smaller and the qualification process is easier. You can usually start accepting payments on the same day you apply with the payment service provider.
You are just getting started with a business or have low sales volumes.Most payment service providers have a simpler pricing structure and flat-rate transaction fees, making it easier to predict and understand your expenses.
You aren’t ready to get locked into a contract.If your business is new and/or you’re unsure of its growth trajectory, it's best to avoid startup costs and long-term contracts. Payment service providers generally have month-to-month options with no setup fees.
How to get a merchant account
Define your needs Take a good look at your business to determine exactly what features you need in order to accept electronic payments. Many merchant account providers offer customizable options to fit your business needs.
Research your options Once you’ve narrowed down your top three to five options, schedule a consultation with each provider. This is a good opportunity to request a quote, get a feel for the customer service and ask about fees.
Gather your documents Generally, you will need to show that you are a legitimate business, have an established bank account and are in good credit standing. A merchant account provider may ask for your business license, EIN, articles of incorporation or business bank account information.
Fill out an application You will complete an application and go through the underwriting process, during which the merchant account provider will determine your eligibility based on factors such as your type of business, where it’s located, how long it’s been open and your sales volume.
Stax by Fattmerchant
Why we like it: Stax is a subscription-based merchant account provider that includes a terminal, ACH processing and analytics. The all-in-one payment platform allows users to manage their transactions from a single dashboard and is especially ideal for high-volume businesses that rack up large processing bills. Read our full Stax review .
Monthly software costs $99 if you process less than $150,000 per year. $139 if you process between $150,000 and $250,000 per year. $199 and up if you process more than $250,000 per year. Payment processing fees Interchange plus 8 cents for in-person transactions. Interchange plus 15 cents for manually keyed transactions. Hardware costsWhy we like it: Payment Depot uses an interchange-plus pricing model, tailors markups to your specific business and doesn’t charge a monthly subscription fee. You can reprogram your existing terminal for free, or purchase terminals and POS systems for an additional cost. Read our full Payment Depot review .
Monthly software costs Payment processing fees 0.2%-1.95% plus interchange. Hardware costsWhy we like it: Dharma Merchant Services uses an interchange-plus pricing model and charges a monthly fee to use its services. It offers discounted rates to nonprofit businesses and sells Clover POS hardware for brick-and-mortar businesses. Read our full Dharma Merchant Services review .
Monthly software costs $12 for nonprofits. $15 for business to business, e-commerce, hospitality, retail and restaurant. Payment processing fees Interchange plus 0.15% + 8 cents for in-person transactions. Interchange plus 0.20% + 11 cents for online transactions. Interchange plus 0.25% + 8 cents for in-person AmEx transactions. Interchange plus 0.30% + 11 cents for online AmEx transactions. Hardware costs $149 for Walker 2 chip, swipe and NFC card reader. $295 for First Data FD-150, Verifone Engage V200c, Ingenico Desk/3500 or Dejavoo Z11 terminals. $369 for Ingenico Desk/5000 terminal. $480 for FD-150, Desk/3500, V200c or Z11 terminals plus a separate pinpad. $649 for Clover Flex mobile card reader with printer. $899 for Clover Mini POS device. $1,649 for Clover Station Solo POS bundle. $1,999 for Clover Station Duo POS bundle. Frequently asked questions Can anyone get a merchant account?Merchant accounts are for businesses and require an application process. Specific requirements for approval will vary based on the institution.
How do I create a merchant account?A merchant account usually requires an application. Start by researching your options, and preparing necessary documents such as your business license, EIN and business bank account information. Specific requirements will vary based on your account provider.
How much does it cost to open a merchant account?Setup fees are at the discretion of the specific lender, and may range from $10–$30. You may be charged a higher fee if your business is considered higher risk.
Can anyone get a merchant account?Merchant accounts are for businesses and require an application process. Specific requirements for approval will vary based on the institution.
How do I create a merchant account?A merchant account usually requires an application. Start by researching your options, and preparing necessary documents such as your business license, EIN and business bank account information. Specific requirements will vary based on your account provider.
How much does it cost to open a merchant account?Setup fees are at the discretion of the specific lender, and may range from $10–$30. You may be charged a higher fee if your business is considered higher risk.
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On a similar note.
Featured card placement may be affected by compensation agreements with our partners, but these partnerships in no way affect our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
NerdWallet Rating Starting Atin-person; 2.9% + 30¢ online.
Read Review Learn more Best Payment Processing Companies NerdWallet Rating Learn moreon Helcim's website
plus interchange, in-person; 0.50% + 25¢ plus interchange, online.
Learn moreon Helcim's website
NerdWallet Rating Learn moreon Square's website
in-person; 2.9% + 30¢ online.
Starts at $0/month for unlimited devices and locations.
Learn moreon Square's website
NerdWallet Rating Learn moreon Stripe's website
in-person; 2.9% + 30¢ online.
Learn moreon Stripe's website
NerdWallet Rating Learn moreon Shopify's website
in-person; 2.9% + 30¢ online (Basic plan).
and up for e-commerce plans with POS Lite; Can upgrade to POS Pro for an extra $89.
Learn moreon Shopify's website
Compare more payment processors MORE LIKE THIS Small BusinessFactor in hardware portability, software integrations and your business’s specific industry needs to determine the best POS system.
Factor in overall cost, terms, customer support and integrations to find the best merchant services for your business.
The best card reader for your business will integrate with your larger POS system and be as mobile as your business is.
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